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December 21, 2007

107.8%
by Angelo Campione

12/21/2007 8:51:28 PM

This month we had an 9.0% gross gain, which brings this services' net gains to $10,778 on a starting capital of $10,000, i.e. 107.78% over 12 months. A TRIPLE DIGIT Annualized Return! For a full break up of this performance, CLICK HERE.

Our system remains in Buy mode. Friday's large gap up and continuation meant that we didn't get our desired put spread. Please note, this will happen from time to time, it's not a problem. We simply reassess the market conditions and issue a new suggestion for the next trading session (expect this Sunday evening).

Position Recap:

No positions open

SPX Chart

The market found support this week around the 1440 level and has rebounded strongly to get back into the 1460 - 1490 resistance level. We could see some large moves both up and down over the next couple weeks as people take time off and trading volumes drop. The bias is up, so a year end finish around the 1500 level seems likely.

From the chart above we see that while the market gained around 40 points from Monday's close, we are forming a symmetrical triangle and this is a pattern of indecision. The trading range in the near term is likely to be contained between 1460 and 1510 and I don't anticipate a break of this pattern until mid January. Once the pattern is broken, either up or down, that will then set the tone for the next few months.

Summary of Position Last Month

We entered a Dec 1325/1315 Put Option Spread on November 16 and received a premium of $90 per spread. For our portfolio, this equated to a net return of $87.20 per $1,000 of margin or 8.72% after commissions for one month (using Interactive Brokers commission rates). The CBOE settlement price for the SPX options for December was 1474.95.

Summary of 2007

In the face of what seemed quite a challenging year in terms of market volatility, we generated a net return of over 100% with relatively low risk. Our net percentage returns for the year are as follows:

Please note, if you didn't compound your profits, then the net return for the year would have been 76.5% (simply adding up the monthly returns).

We only had one losing month for a minimal loss and then at the beginning of the May options period, we were in buy mode and anticipated another pullback to happen imminently and that would have taken us into sell mode. The only issue was that the sell signal didn't eventuate and we missed the trade (going forward, I don't anticipate this happening again as we now enter half positions if we anticipate a change in the immediate market conditions).

On the subject of volatility, it's generally not understood that when volatility is high, it looks as though the risk is high, however all that uncertainty allows us to stretch out our distance from the market so that we allow for the wider gyrations. On the other hand in a low volatility environment, we can't go too far from the market as the premiums become very thin. It then becomes a matter of when the volatility picks up, not if, and if you have positions on both sides of the market, you can get caught in a position that's too close to the market. This is where a lot of people got caught in late Feb. We had low volatility for months and then on Feb 27, we dropped around 4% in one day and suddenly volatility was awakened. Fortunately for us, we were in sell mode at the time and not exposed to the downside at all.

Note, for 2008 we'll be starting our performance page with a fresh $10,000 balance so that we can track how each year performs. Obviously, you are free to keep compounding your capital if you choose but certainly don't to be tempted to add more than you are comfortable losing. While our result for the year has been excellent, I cannot guarantee future results, so stick with you trading plan and allow yourself to be abundant.

Annual Subscription Offer

If you haven't taken up our annual subscription offer yet, you can increase your monthly returns further by saving 20% on your subscription fees. By taking up our annual subscription offer, you get a year's service for the equivalent of $39.92 per month (or 20% less than the current monthly fee). At this point, I don't know of another Index Credit Spread service that offers better value and so if you're enjoying this service, I strongly recommend that you take advantage of this offer.

Please click on this link for your annual subscription: Annual Subscription

Please contact customer support if you have any issues at: customersupport@stockbarometer.com

A final quote for the year from Henry Ford, "Whether you think you're right or whether you think you're wrong, you're right".

From the team and myself, I thankyou for your continued interest in our service. I wish you a safe and joyous festive season and a prosperous year ahead, and as usual Feel free to email me at angelo@stockbarometer.com if you have any questions or comments.

PLEASE NOTE, I will be taking some time off over this festive period and the next update report will be issued in the second week of January. I will however, still be monitoring the market daily and if any action is required, I will issue an email accordingly (on Sunday evening I'll issue a new trade suggestion for January).

Cheers,

Angelo Campione

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Important Disclosure:

Futures, Options, Mutual Fund, and Equity trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in these markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to buy/sell Futures, Options, Mutual Funds or Equities. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this Web site. The past performance of any trading system or methodology is not necessarily indicative of future results.

Performance results are hypothetical. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as a lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.

Investment Research Group and all individuals affiliated with Investment Research Group assume no responsibilities for your trading and investment results.

Investment Research Group (IRG), as a publisher of a financial newsletter of general and regular circulation, cannot tender individual investment advice. Only a registered broker or investment adviser may advise you individually on the suitability and performance of your portfolio or specific investments.

In making any investment decision, you will rely solely on your own review and examination of the fact and records relating to such investments. Past performance of our recommendations is not an indication of future performance. The publisher shall have no liability of whatever nature in respect of any claims, damages, loss, or expense arising out of or in connection with the reliance by you on the contents of our Web site, any promotion, published material, alert, or update.

There is a very high degree of risk involved in trading. Past results are not indictive of future returns. Stock Barometer and all individuals affiliated with Stock Barometer assume no responsibility for your trading or investment results.

Copyright © 2007 Angelo Campione

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